How to identify the Ideal Customer Profile for B2B?
CEOs and Sales Directors in the B2B space often struggle to reach their revenue goals because of а missing piece in their business puzzle – they still haven’t defined what their Ideal Client Profile (ICP) is. With this short article, we aim to answer questions about the Ideal Customer Profile for B2B and provide a step-by-step guide on how to build one for your business.
In this article you will learn about:
- What is an Ideal Customer Profile for B2B (used abbreviation – ICP) and why it is valuable;
- What criteria you should use to define the ICP for your company;
- Why should tech companies build an ICP;
- Best practice tips;
- Common mistakes;
- The difference between a Buyer persona and an Ideal Customer Profile;
- The Decision-making unit (DMU) explained;
- How can Out2Bound help you to define your ICP?
What is an Ideal Customer Profile for B2B and why is it so valuable?
The Ideal Customer Profile for B2B could be defined as a company that best meets the desired goal for your product or service and brings the most value to your business.
It is critical and extremely important to define your Ideal Customer Profile if you are starting a new business or struggling with your current sales. You need to be clear about who you are, to whom you are trying to sell your solutions to and what will be the best way to reach your potential clients with your offerings. It is crucial that you don’t waste unnecessary energy and time on the accounts with no opportunity for a deal. This will only lead to poor sales and new revenue results for your business.
The Ideal Customer Profile for B2B should be designed for you to understand who the most valuable customers are. When you do, you can focus on them solely and create a personalized approach to address their problems and needs and win them as clients.
Why should tech companies build an ICP even if their solution is applicable for а wide range of people and companies?
Companies in the tech domain can be divided into 2 – service and product companies.
Service companies usually provide their knowledge for a set of technologies and their teams to help other tech companies or companies from various industries to improve/change a process through custom-made software. They are craftsmen – through their hands and heads they can offer a specific solution for a specific business case that a client may have, no matter what the client does and what the problem is. This means they can do everything for everyone – both a blessing and a curse.
Having in mind companies that provide software services are present in every country and on every continent, it gets a bit tricky to compete with them. If you try with pricing – there will always be someone that can do it cheaper. And everyone sells quality and trust, which is hard to present before starting an actual project. This means it is a full time job to seek for opportunities and persuade decision-makers that you can do the job.
To be able to focus both your efforts and ability to showcase your expertise if you are a service company – you need to define your Ideal Client Profile. This will help you stand out of the crowd, win business faster and know your value for the specific clients you are focused on servicing.
Software product companies by default need to have a well defined ICP. That’s because they usually package domain expertise and deliver it through a predefined software solution for that specific type of companies. So it is like a no-brainer when you think about it – you need to know who you are selling to in order to both focus your marketing and sales team. At the same time, you need to know who you’re adapting and enhancing the product. That’s so you won’t end up building random features you only think are worth building.
Communicating a clear strategy within the company is a key factor. For this reason, when advising clients on defining and delivering fit-for-purpose technology, ICP strives to provide a smooth integration for you and your business.
Criteria that define your Ideal Customer Profile for B2B
There are many criteria you can use to define your Ideal Customer Profile for B2B. Here are some of the most used ones:
- Type of company – product or service
- Which industry they belong to;
- The subsector of the solution they offer – cloud computing, manufacturing automation, ERP integration…
- Size of the company – startup, SME, enterprise, and if needed – define size by ranges of the number of employees
- Industry(ies) in which their customers operate;
- Location of the company
- Average turnover of the company;
Depending on the situation, brand, service or product, other data points may appear on the list to help you identify the right audience for your offer. To define your ICP, you need to be as specific as possible. Making your ICP too broad doesn’t mean you’re leaving room for more opportunities. It means the opposite – you’re losing opportunities because you’re not presenting your expertise well enough.
The difference between ICP and Buyer Persona is important to understand
These two terms are very often understood as one and the same. However, this is not correct. An ideal customer profile is a company’s understanding of a customer that best fits your goal. While a buyer persona is a description of a person who will get the most value from your business. To know and identify who the best Buyer Personas are for your business, you must first understand and define what your Ideal Customer Profile for B2B is.
There is one more term often used when defining where to focus your attention to – DMU, or decision-making unit. This is commonly used when you have enterprise clients as your target market. Such decisions are not made solely by one person. You need to identify the unit that will contribute to making a decision for using your solutions.
On average for enterprise decisions you have 6.8 people participating in the process.
Quite often the DMU includes the following roles:
- Initiator – the player who recognizes a problem and tries to find a solution for this problem. This is the most important person in the decision-making unit or DMU;
- Buyer – the actual negotiator with the supplier. The buyer negotiates about contract terms and eventually places the order. He takes up one of the most important roles within the decision-making unit;
- Decision-Maker – the person who is ultimately responsible for choosing the supplier. As a result, takes up an important position within the decision-making unit or DMU;
- Coordinator/Gatekeeper – responsible for the information provided within the decision-making unit or DMU. They determine the type of information that will be delivered to a certain player. As a consequence they can heavily influence the decision-making process;
- Influencer – can exert influence on the purchasing process by setting preconditions. They can be found at all levels of the organization;
- User – individual or group who actually uses the product and derives benefit from it.
5 Common mistakes in creating your Ideal Customer Profile for B2B
It is true that we learn from our mistakes, but before you make your own, here are a few common ones found from our research that must not be in your – to-do list.
1: Copying someone else’s ICP
You’re probably not the only one doing what you’re doing, but remember that every company is aiming to solve a different problem. That means you need to focus on creating your own ICP and buyer personas rather than copying your competitors’. Focus on where your strengths are and where you already have experience with successful projects for happy clients.
2: Neglecting to use your ICP
When deciding on your Ideal Customer Profile for B2B and going through the entire process of discovery, you need to remember to stick to your findings. Adapt your marketing and sales based on the ICP and don’t do it only for the sake of it.
3: Making it up
Your Ideal Customer Profile for B2B should be based on real facts and solid information. If you haven’t worked with real customers before, it will be harder for you to know for sure who to target and who will best match your offer. It is a rule that you should revise your ICP from time to time.
If you are starting a new value proposition through a service or product, define a few ICPs and test them with the market.
4: Mistaking ICP with Buyer Persona
These are two different terms that are very often mistaken to mean the same thing. As described above – ICP is more of a general description of your target audience, while Buyer Personas are detailed profiles of potential customers. You can have multiple Buyer Personas to one Ideal Customer Profile.
In the perfect case scenario – they will complement each other.
5: Do not rely only on firmographics
It’s not enough to define your ICP using only firmographics like the ones above. You also need to know what drives your target audience’s buying decision and or know the problem you solve for them. Another important thing to look at is psychographics. This is data for a specific group of people, observing their attitudes, lifestyles, aspirations and more.
Best Practice Tips
You need to focus on selling to businesses with the highest potential for success using your services or products. If a customer is not such a good fit for your offering, it will rob your customer success team of time and would definitely end up costing your business more than it could get out of the partnership between the two of you. At the end of the day – don’t try to win business at any cost, but look where you will give the most value and get the proper returns for it.
How can Out2Bound help you find your Ideal Customer Profile for B2B?
Having been in sales development in the technology sector for more than 5 years, our team of experts has gained a lot of experience in defining the Ideal Customer Profile for B2B. Our methodology with clients involves a few steps, one of which is the market research process, also known as step 2.
During this step, your assigned SDR and Sales Lead will go through with you and cover all the necessary questions and details to find the right target for your business.
Author: Asya Zaharieva, Junior Marketing Specialist at Out2Bound